7 Ways to Reduce Operating Costs and Increase Profitability


Growing company efficiency and scalability are important factors in your early success.  Managing long term operational inefficiencies will have significant impact on reducing future financial leakage. 

Here are 7 areas to look which will help your profitability: 


Your business has many processes that can be automated from day 1.  The earlier you choose a strong financial package you can automate your billing, invoicing and payables processes. More automation means less people required to manage these as you scale. Reducing manual process here could also assist in prompt payment discounts and receivables from your customers.


Every company can leverage an outsourcing model.  Especially, before you hit the critical mass stage. Full time resources are not always the best use of funds.  Leverage fractional services for legal, accounting, marketing and event planning to reduce headcount for fractional resource needs. Don’t discount off-shore development. This can be a significant cost reduction if managed properly.


This one goes without saying, driving revenue increases profitability.  However many organizations early on struggle with profitable revenue sources to keep their head above water. Focusing in on only the most important revenue streams will help drive revenue and decrease leakage of staff and operational costs with bad choices and custom work.


This is the proverbial elephant in the room.  With strategic focus, you can drive strategic staffing. Having too many irons in the fire leads to inefficiencies in your staffing needs. Additional overhead costs not required at that point in time in your business helps keep headcount to a minimum.  See #2 & #3 as this sometimes these directly related. Bigger is not always better.

General Operations

You may not realize this, but as you end your lease term you may have the leverage to renegotiate a better lease. Or if it makes sense to downsize to a smaller location, allow your staff to work more remote which can offer more flexibility in the office space required. Don’t forget to also look at other monthly services such as internet providers, cleaning services, etc.  

For example, one company we worked with was able to downsize from a 10,000 sq ft location to 4,500 sq ft location, reducing lease costs by $6,000/month. In turn it promoted all non-essential personnel to work remote and providing floating desks and collaboration space and utilities reduced as well. 

The company was then able to reduce on premise telecommunications (phones), and furniture, by leveraging the use of video and conference tools which are a faction of the cost. This also promoted scalability as new hires could be based anywhere to find the best talent.


Cancel or change technologies to reduce fees or services and promote better automation. Not surprisingly, as we do in our personal lives companies license many tools on a monthly basis to accomplish tasks. Take a look over the last year of your services and determine your tool utilization looking for consolidation. This could reduce monthly expenditures and burn. 

Ask yourself, Do you need the Enterprise version? Could you work with the team or business editions etc? 

Travel and Expenses

Develop a formal travel and expense plan to reduce travel spend leakage. Require staff to provide receipts larger then $25.00 for all spend, adopt a corporate credit card to receive cash back rebates to the company as well as utilize tools such as Amex Travel and Egencia to provide the staff with low cost tools that promote travel policies. 

There you have it.

7 Sure fire ways for you to reduce costs, increase profitability and promote growth in your organization.

Last modified: August 9, 2019

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